In re Kemmer

• Citation: 315 B.R. 706
• Decision Date: 15 September 2004
• Docket Number: No. 03-34535.,03-34535.
• Parties: In re Jack Thomas KEMMER d/b/a Kemmer Flag Car Escort Service Peggy Diana Kemmer, Debtors.
• Court: United States Bankruptcy Courts. Sixth Circuit. U.S. Bankruptcy Court — Eastern District of Tennessee

315 B.R. 706

In re Jack Thomas KEMMER d/b/a Kemmer Flag Car Escort Service Peggy Diana Kemmer, Debtors.

No. 03-34535.

United States Bankruptcy Court, E.D. Tennessee.

September 15, 2004.

COPYRIGHT MATERIAL OMITTED

COPYRIGHT MATERIAL OMITTED

Richard M. Mayer, Esq., Landmark Center, Knoxville, TN, for Debtors.

Steven D. Lipsey, Esq., Stone & Hinds, P.C., Knoxville, TN, Natalie M. McGhee, Esq., Thomas A. Lee, III, Esq., Becket & Lee, LLP, Malvern, PA, for eCast Settlement Corporation.

Gwendolyn M. Kerney, Esq., Knoxville, TN, Chapter 13 Trustee.

MEMORANDUM ON OBJECTIONS TO CLAIMS

RICHARD S. STAIR, JR., Bankruptcy Judge.

Before the court are the following nine (9) objections to claims filed by the Debtors on May 14, 2004:(1) Objection to the Claim of Fleet Bank (RI) NA and its Assigns by eCast Settlement Corporation; (2) Objection to the Claim of Discover Bank; (3) Objection to the Claim of Chase Manhattan Bank USA, by eCast Settlement Corporation; (4) Objection to the Claim of Sherman Acquisition, LP/Resurgent Capital Services; (5) Objection to the Claim of Bank One Delaware, N.A. f.k.a. First USA; (6) Objection to the Claim of Bank One Delaware, N.A. f.k.a. First USA; (7) Objection to the Claim of Chase Manhattan Bank USA, by eCast Settlement Corporation; (8) Objection to the Claim of eCast Settlement Corporation, Assignee of General Electric Private Label/Lowes/Retail; and (9) Objection to the Claim of Household Bank and its Assigns by eCast Settlement Corporation (collectively, Objections to Claims).¹ On June 24, 2004, eCast Settlement Corporation (eCast) filed the Response of eCast Settlement Corporation to Debtors' Objection to Claim (Response), asking the court to overrule the Debtors' Objections to Claims with regard to those claims assigned to it.

The facts and documents essential to the resolution of these matters are before the court upon the Objections to Claims, the Response, the Brief in Support of Debtor(s) Objections to Claims Filed by eCAST Settlement Corporation on August 13, 2004, and the Memorandum of Law in Support of eCAST Settlement Corporation's Response to Debtors' Objection to Proofs of Claim filed on August 27, 2004. The court has determined that the Objections to Claims raise questions of law and that an evidentiary hearing is therefore not required.

This is a core proceeding. 28 U.S.C.A. § 157(b)(2)(B) (West 1993).

I

On August 14, 2003, the Debtors filed the Voluntary Petition commencing their bankruptcy case under Chapter 13 of the Bankruptcy Code, together with their required statements and schedules. In their Schedule F — Creditors Holding Unsecured Nonpriority Claims, the Debtors listed numerous credit card accounts. On August 19, 2003, a Notice of Commencement of Case was issued by the clerk and mailed to creditors, fixing December 31, 2003, as the deadline for filing proofs of claim by non-governmental entity creditors. The Debtors' Chapter 13 Plan, proposing bi-weekly payments of $283.00 for 60 months, with a dividend to unsecured creditors of 20-70%, was confirmed on January 8, 2004.

On May 14, 2004, the Debtors filed the Objections to Claims, asking the court to disallow in their entirety the following nonpriority unsecured claims: (1) Claim Number 15 in the amount of $9,098.83, filed on October 17, 2003, by eCast on behalf of Fleet Bank (RI) (Fleet); (2) Claim Number 14 in the amount of $5,800.32, filed on September 11, 2003, by Discover Bank (Discover); (3) Claim Number 10 in the amount of $7,163.01, filed on October 14, 2003, by eCast on behalf of Chase Manhattan Bank USA (Chase); (4) Claim Number 6 in the amount of $8,903.36, filed on October 14, 2003, by Sherman Acquisition, LP/Resurgent Capital Services (Sherman Acquisition); (5) Claim Number 7 in the amount of $7,856.91, filed on September 23, 2003, by Bank One Delaware, N.A., f.k.a. First USA (Bank One); (6) Claim Number 8 in the amount of $10,307.64, filed on September 23, 2003, by Bank One; (7) Claim Number 9 in the amount of $4,765.96, filed on October 14, 2003, by eCast on behalf of Chase; (8) Claim Number 17 in the amount of $677.69, filed on November 3, 2003, by eCast on behalf of General Electric Private Label/Lowes/Retail (Lowe's); and (9) Claim Number 16 in the amount of $7,538.32, filed on October 6, 2003, by eCast on behalf of Household Bank (Household).² The Debtors ground their Objections to Claims solely upon the argument that each creditor failed to meet the requirements set forth in Rule 3001(c) of the Federal Rules of Bankruptcy Procedure, averring that "the claim was based on [a] writing and the original and/or duplicate was not contained with the claim. The claim has no paper writing."

With the exception of eCast, none of the creditors filed a formal response to the Debtors' Objections to Claims. Instead, following receipt of the Objections to Claims, Discover amended Claim No. 14 on June 1, 2004, attaching supporting documentation in the form of an account statement for July 2003. Similarly, Bank One filed an amendment to its Claim No. 8 on June 1, 2004, amending the amount to $10,582.38 and attaching copies of eight monthly statements in support thereof. It did not, however, amend its Claim No. 7, and Sherman Acquisition did not amend its Claim No. 4.

In its Response, eCast argues that the challenged Proofs of Claim do include attachments evidencing the respective claims in compliance with Federal Rule of Bankruptcy Procedure 3001(c), but in the event that the attachments do not comply, eCast requests an opportunity to amend the claims. The Response also includes statements regarding the Fleet account, Claim No. 15, and advises that additional documentation has been requested concerning the other claims assigned to eCast. Finally, eCast argues that the Debtors listed the accounts in their statements and schedules, constituting a judicial admission.

On June 30, 2004, the court held a preliminary hearing on the Debtors' Objections to Claims, and pursuant to an Order entered on July 2, 2004, eCast was given thirty days to amend its claims. The court also set forth a schedule for the Debtors and eCast to brief their respective arguments. Finally, the court sustained, without opposition, the Debtors' Objections regarding the Discover Bank, Bank One, and Sherman Acquisition claims, as those parties did not file responses. Orders disallowing those claims in their entirety were entered on July 8, 2004.

On July 16, 2004, the Chapter 13 Trustee (Trustee) filed two Motions to Reconsider Disallowance of Claim regarding the Discover and Sherman Acquisition claims. In support of her Motions, the Trustee argued that the Debtors' Objections to Claims were not initiated at the Debtors' request, were not grounded in fact, and were contrary to the spirit and intent of the Bankruptcy Code. The Trustee further averred that the claims met the requirements of Rule 3001 and were entitled a prima facie presumption of validity. Thereafter, on August 20, 2004, the court entered an Order vacating its July 8, 2004 Orders disallowing the claims filed by Discover and Sherman Acquisition, and on September 2, 2004, the court, sua sponte, entered an Order vacating its July 8, 2004 Orders disallowing the two Bank One claims. The Debtors' objections to all nine (9) claims were set on the court's September 15, 2004 afternoon docket, at which time counsel were advised that a ruling would be issued from the bench.³

II

Upon the commencement of a bankruptcy case, the debtor must file statements and schedules, listing all assets, liabilities, creditors, co-debtors, income, expenses, and other pertinent financial and personal information. See 11 U.S.C.A. § 521 (West 1993); FED. R. BANKR. P. 1007. The Bankruptcy Code defines a creditor as "[an] entity that has a claim against the debtor that arose at the time of or before the order for relief concerning the debtor." 11 U.S.C.A. § 101(10)(A) (West 1993). A claim is defined as "[a] right to payment, whether or not such right is reduced to judgment, liquidated, unliquidated, fixed, contingent, matured, unmatured, disputed, undisputed, legal, equitable, secured, or unsecured[.]" 11 U.S.C.A. § 101(5)(A) (West 1993).

In any bankruptcy case, a debtor's creditors may file a proof of claim. 11 U.S.C.A. § 501(a) (West 1993). "[T]he proof of claim is the creditor's response to the information provided by the debtor in the debtor's schedules." OFF. FORM 10 (INSTRUCTIONS). "The purpose of the rules regarding claims is to require creditors to provide sufficient information so that a Debtor may identify the creditor and match the creditor and the amount of the claim with the claims scheduled by the Debtor." In re Hughes, 313 B.R. 205, 212 (Bankr.E.D.Mich. Aug.18, 2004).

Proofs of claim are governed primarily by Federal Rule of Bankruptcy Procedure 3001, which provides, in material part:

(a) Form and content

A proof of claim is a written statement setting forth a creditor's claim. A proof of claim shall conform substantially to the appropriate Official Form.

(b) Who may execute

A proof of claim shall be executed by the creditor or the creditor's authorized agent except as provided in Rules 3004 and 3005.

(c) Claim based on a writing

When a claim, or an interest in property of the debtor securing the claim, is based on a writing, the original or a duplicate shall be filed with the proof of claim. If the writing has been lost or destroyed, a statement of the circumstances of the loss or destruction shall be filed with the claim.

....

(f) Evidentiary effect

A proof of claim executed and filed in accordance with these rules shall constitute prima facie evidence of the validity and amount of the claim.

FED. R. BANKR. P. 3001. In Chapter 13 cases, in order to participate in the claims distribution process, unsecured creditors must file proofs of claim. See FED. R. BANKR. P. 3002(a) ("An unsecured creditor ... must file a proof of claim or interest for the claim or interest to be...